Part IV, Convenience:
Convenience: Finally we get to where the rubber meets the road. Convenience is most important for the final two links in the chain- the contractor and the customer (borrower) where the sales, loan application and installation occur. Without a convenient product and funding process, the lending product will see limited uptake. All too often we see contractors and borowers taking on loan products with interest rates north of 20% just because the funding is easy to obtain.
Undertaking an energy efficiency capital improvement requires navigating uncharted territory for most borrowers. What incentives are available to me? Will this piece of equipment solve my issues? Can I trust the contractor? How much time and effort to I have to expend to get this done and get on with my life?
Let’s face it, the typical borrower doesn’t know much about financing or energy efficiency, so obtaining new equipment and financing must be as simple and straightforward a process as possible if it is to be successful. In other words, the most successful programs tend not to be the ones with the best rates and terms, but those with the most simple and customer friendly processes, that get to funding and completion in the least amount of steps.
Some of the key elements here include:
- A simple application and approval process.
- Confident, certified and well informed contractors.
- Origination in as few interactions as possible. Limiting involved actors/parties and reducing paperwork.
- Easy servicing and payment options, preferably on an existing bill (like the utility bill).
Often times loan programs’ success is stymied by their own source funding, when that source funding comes with data stipulations, or process stipulations such as mandatory energy audits or overly stringent application documentation. In order to capture maximum marketshare- financial products should allow for both reactive loans “help! my furnace broke and it’s 5 degrees outside!” and proactive loans “i would like to do a whole home energy retrofit this fall”.
Additionally- many programs trip over their own feet trying to collect data to verify that they are meeting their grant funding goals. I see those days coming to a close as we move into a post ARRA world and private capital starts to supercede public funding as the source for energy lending programs, which, in many ways was the original intent (market transformation) of those ARRA dollars to begin with. Now it’s just a matter of coupling great rates and terms with customer friendly application and funding processes and I predict EE lending will continue it’s upward trajectory in the coming years.